About 10% of the population in this country pay taxes. What if that 10% didn’t pay taxes for four weeks of the year? I’m not saying we must, but what if …?"
Just to be clear, Phuti Mahanyele, chair of Sigma Capital, wasn’t calling for a tax revolt when she said this at a Financial Mail panel discussion at Johannesburg’s Inanda Club last week.
Rather, her point was that the corporate sector ought to embrace activism. "The reality is, we have got power, and we need to stop giving it to someone else to speak to us. We need to start using it, because we are the ones affected, our children are the ones affected, our families are the ones affected," she said.
The power of South Africans’ tax contributions was, in fact, a much-debated topic by the panel, which also included Naspers CEO Bob van Dijk and Lonmin CEO Ben Magara, and was hosted by Sanlam Private Wealth CEO Daniël Kriel.
But the panel’s emotions were tangibly raw, mirroring the mood in executive suites around the country following the brutal ejection of finance minister Pravin Gordhan during Zuma’s midnight of the long knives, and the consequent scalding twin downgrades to junk status from S&P and Fitch.
Magara pointed out that taxpayers, who fuel the government machinery, should make themselves heard. "We possibly pay 40% tax, 14% Vat [and] the fuel levy — that’s 60%. So of an [average executive] annual salary, seven months a year [we’re] paying government. We have to have a voice," he said.
Sanlam’s Kriel isn’t one to mince his words either.
In a report sent to Sanlam’s clients this week, Kriel said "enough is enough". "As a business, we can no longer be impartial and watch from the sidelines. We believe we owe it to our clients, and indeed all South Africans, to add our voice to the growing chorus from all sectors of society to dislodge the president," he said.
Clearly, it is time for business to stand up. Especially as it seems Zuma is going nowhere, having strong-armed a supine ANC into rolling over to protect him. Seeing this, many South Africans feel compelled to "do something" — they just aren’t sure what.
This is why starving government of cash has been mooted, including by trade union federation Fedusa, which said last week that, in this toxic environment, citizens have a "right" to stop paying tax.
Now, tax revolts against venal politicians have a proud history: from the Jews in first century Judea refusing to pay "temple tax" to the Romans; to the 1773 Boston Tea Party protest against the "tea tax" that led to the American Revolution; to Karl Marx declaring in 1848 that "taxes are abolished".
In SA, the most famous tax revolt took place in 1906, when Zulu chief Bambatha kaMancinza protested against a new £1 "poll tax" designed by the British colonists in Natal to "teach [black people] the value of labour", as Mahatma Gandhi wrote. In other words, to force black people off the land and into "mines hundreds of feet deep in order to extract gold and diamonds" for the colonialists. But, after 4,000 Zulu deaths, the rebellion ended when the British murdered Bambatha. The house won, again.
This would suggest few tax protests succeed. But is this even a legitimate route for protest anyway?
You’d expect Judge Dennis Davis, who chairs the Davis tax committee, to answer bluntly, and he doesn’t disappoint. "It’s illegal — it’s that simple," he says.
"Paying tax isn’t immoral; our constitution obliges us to [do so]. Someone might argue that it’s justifiable to refuse to pay tax to a state which then wastes our money, that this makes it an ‘immoral’ law. But I don’t think any court would buy that argument."
Davis’s view was echoed last week by JSE CEO Nicky Newton-King, who said: "It is not for [business] to pick and choose which laws to comply with."
A tax revolt, she said, would hurt the poor.
Davis says that if a country can’t collect enough tax, the floodgates to disaster open. "If we raise a hell of a lot less than we expect, to the extent that it threatens social grants, we’ll lose the social stability that paying grants to SA’s most vulnerable provides," he says.
Obviously, this is true. Most likely, even those talking of a tax revolt realise this, but have mooted the suggestion only out of a raging frustration at the fact that Zuma has made such blindingly obvious blunders in stark violation of his oath to the country.
But when highly rated executives risk fiscal blasphemy by suggesting this as a potential solution to stifle the funding for Zuma’s state capture project, it’s time to pay attention.
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